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Altera Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: ALTR

SG&A for the quarter was $72 million and the guidance for Q3 is $72 million to $74 million. We are reducing our previous full year SG&A guidance from $293 million to $288 million mainly as a result of a reduction in variable compensation.

With respect to income taxes, during the quarter, we recognized a net tax benefit of $24.4 million relating to the release of federal tax liabilities and interest. This amount relates primarily to the close of federal statutes for 2002 and 2003, and as a discrete benefit in the quarter.

Moving to the balance sheet. Accounts receivable increased, as there were significant shipments to distributors in the final weeks of the quarter. Given this timing, these shipments were not yet due to be collected when we completed the quarter, which is why our AR aging is unchanged from prior quarters. If the size of the increase is surprising to you, remember that our distributors purchase product at list price, which amplifies the AR swing. In addition, we had several -- we had a large sequential revenue increase which exacerbates the list price dynamic.

Inventory for the quarter ended at 3.7 months supply on hand, and the guidance for Q3 is approximately 4 months supply on hand. As you will recall, we intentionally increased inventory in Q2 in order to secure 40-nanometer supply and to support the 28-nanometer product ramp. At this point, we do not see a need to have inventory of higher than 4 months supply on hand.

Next, you can see we have completed a substantial share repurchase in the quarter, 3.5 million shares. In addition, since the end of Q2, we have repurchased an additional 1.6 million shares. We continue to view share repurchase opportunistically. And as much as we would wish for a higher share price, we are very happy to take advantage of this great opportunity.

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